ARF tumor suppressor protein is a key regulator of the MDM2-p53 signaling axis. ARF interferes with MDM2-mediated ubiquitination and degradation of p53 by sequestering MDM2 in the nucleolus and preventing MDM2-p53 interaction and nuclear export of p53. Moreover, ARF also directly inhibits MDM2 ubiquitin ligase (E3) activity, but the mechanism remains elusive. Here, we apply nuclear magnetic resonance and biochemical analyses to uncover the mechanism of ARF-mediated inhibition of MDM2 E3 activity. We show that MDM2 acidic and zinc finger domains (AD-ZnF) form a weak intramolecular interaction with the RING domain, where the binding site overlaps with the E2∼ubiquitin binding surface and thereby partially reduces MDM2 E3 activity. Binding of human N-terminal 32 residues of p14ARF to the acidic domain of MDM2 strengthens the AD-ZnF-RING domain interaction. Furthermore, the N-terminal RxFxV motifs of p14ARF participate directly in the MDM2 RING domain interaction. This bivalent binding mode of p14ARF to MDM2 acidic and RING domains restricts E2∼ubiquitin recruitment and massively hinders MDM2 E3 activity. These findings elucidate the mechanism by which ARF inhibits MDM2 E3 activity.